Voters will decide thrust of economic policy going forward

As the national economy struggles to find solid footing following the worst economic recession since the Great Depression, candidates for federal office, from the presidential race down to the local congressional races, are locked in a philosophical debate over how to create more jobs and get the economy growing at a faster rate.

President Barack Obama, U.S. Senate candidate Tim Kaine and local Democratic congressional candidates largely favor the theories espoused by economist John Maynard Keynes in the 1930s that say government intervention and investment is the best way to stimulate the economy following an economic collapse.

Republican presidential nominee Mitt Romney, U.S. Senate candidate George Allen and local GOP congressional contenders argue in favor of supply-side economics where the government backs away from direct spending in the economy in order to let the free market and private investment right the nation's economic ship.

"For the first time in a long time, the two political parties have really engaged over the question of which grand economic policy to follow – whether it's a Keynesian stimulate-the-economy approach or a more austere approach," said Quentin Kidd, director of the Wason Center for Public Policy at Christopher Newport University. "The two parties really represent those two sides, especially with adding (Republican vice presidential nominee) Paul Ryan to the Romney ticket."

Obama policy

Republicans contend that the Keynesian model has failed, which they say is evidenced by the slowest economic recovery since the Great Depression under Obama's policies.

Romney campaign officials point out that while the federal budget deficit sits at roughly $1.2 trillion and the national debt has risen by over $5 trillion dollars to more than $16 trillion under Obama, the national unemployment rate has been higher than 8 percent during his term and the economy is only growing at 1.7 percent.

The latest numbers from the U.S. Bureau of Labor Statistics place the national unemployment rate at 8.1 percent. The unemployment rate in Virginia stands at 5.9 percent. Unemployment in Hampton Roads is 6.8 percent, down from 7.1 percent a year ago.

Republicans say those numbers show that Obama's 2009 American Recovery and Reinvestment Act stimulus package, which pumped nearly $900 billion into the economy, failed.

Obama campaign officials say that since the economy hit bottom in February 2010, the president's economic policies have created 4.5 million private-sector jobs, including more than 170,000 in Virginia.

FactCheck.org points out that when public sector jobs are included, the nation has seen a net decrease of 316,000 jobs since Obama took office.

Jesse Richman, professor of political science at Old Dominion University, said – and many economists agree – that the stimulus set a bottom for the recession and kept the economy from sliding into a depression.

"It put a floor to a degree on the slide," Richman said. "It reduced the rate of decline and helped us move from decline to stabilization."

Richman and Kidd said Obama's further efforts to stimulate the economy – in particular, the 2011 American Jobs Act – have been stymied by GOP lawmakers.

In the American Jobs Act, the president proposed giving money to states to hire teachers, fire-fighters and police officers; investing in shovel-ready infrastructure projects to create construction jobs; giving tax credits to small business owners who hire new employees; and investing in renewable energy projects, such as wind and solar, to create green-technology jobs.

To partially pay for the nearly $500 billion American Jobs Act, Obama suggested raising taxes on the nation's highest income workers. This includes letting the President George W. Bush-era tax cuts expire for incomes over $250,000 a year.

Obama campaigned heavily for the bill, including a stop in Hampton last October, but Republicans in the Senate blocked the bill and House Republican leaders never let it come to a vote.

Romney plan

In contrast, Romney has said he has a five-point plan that will create 12 million jobs over the next four years.

Romney has been widely criticized, Kidd and Richman noted, because he does not explain how he would pay for extending all of the Bush-era tax cuts in addition to reducing taxes further for high-income earners.

Additionally, in recent months financial firms Moody's Analytics and Macroeconomic Advisors have issued reports saying that the economy is on track to create roughly 12 million jobs over the next four years regardless of who becomes president.

Richman said, however, that Romney's plan does include some specifics, such as energy expansion and cracking down on China over unfair trade practices.

In Virginia specifically, Romney has said he will lift the Obama administration's five-year ban on drilling for oil and natural gas off the state's coast. Gov. Bob McDonnell's administration has said off-shore drilling in Virginia would create approximately 1,900 jobs and generate $19.5 billion in revenue for federal, state and local governments.

The largest U.S. trade deficit is with China, to the tune of $117.4 billion. Richman said while the Obama administration has taken some action over China's unfair trade practices – including filing a complaint last week – it has been unable to do anything substantial.

Policy referendum

The campaigns have boiled the debate down to two simple arguments, Kidd and Richmond said.

Obama and the Democrats say Romney is offering the same economic policies followed by President George W. Bush, which they contend brought the country to fiscal collapse in the first place. The overarching Democratic message is, "We inherited this mess and it can't be fixed overnight."

Romney and the Republicans put it even more simply by asking Americans, "Are you better off than you were four years ago?"

Richman said Obama is "currently winning the blame fight." He said polls show most Americans are willing to lay the blame for the economic crisis on Bush.

Kidd and Richman said Romney's argument is more difficult to make in the commonwealth because Virginia's economy is doing relatively well compared to the nation on a whole. That doesn't mean it doesn't resonate to a certain degree in Hampton Roads.

But Kidd said voters are "more sophisticated" than just focusing on their region alone and recognize the larger problems in the national economy.

Richman points to a recent ODU poll focusing on Hampton Roads. In that poll, 35.8 percent of respondents rated the national economy as "poor," and 48.4 percent rated it "fair." In the same survey 49.5 percent rated the Hampton Roads economy as "fair," and 12.7 percent rated it "poor."

"Romney still has a chance to make the argument that his policies will make things better," Richman said. "Although local residents are less pessimistic about the local economy than they are about the national economy, a majority remain at least moderately pessimistic about local economic conditions as well."

Kidd said voters will ultimately decide which of the two opposing economic theories will shape the nation going forward.

"One of the big questions Americans are going to answer this year is are we largely Keynesian or are we largely not-Keynesian," Kidd said. "In the end voters are going to vote on the economy."

"President Obama's policies have helped create more than 170,000 new jobs here in Virginia, and America has gained private sector jobs for 30 consecutive months, but we still need to do more as we fight back from the recession. While Republicans would simply double down on the same trickle down and outsourcing policies that caused our nation's financial crisis in the first place, the president has laid out a clear plan that will create incentives for companies to bring jobs back to the United States, help businesses hire returning veterans, put construction workers back on the job rebuilding our crumbling infrastructure, and make critical investments in out-innovating and out-educating the world."

"The policies of the last three and a half years have produced the worst economic recovery since the Great Depression, with fewer jobs, declining wages, and unemployment stuck above 8 percent for 43 straight months. Adding insult to injury, President Obama is putting over 136,000 more Virginia jobs in jeopardy as a result of his devastating defense cuts. Mitt Romney will deliver the new leadership and strong economy Americans deserve by reversing the President's harmful cuts to our military and implementing his plan for a stronger middle class which will create 340,000 new Virginia jobs and more take-home pay."

U.S. Senate

George Allen spokeswoman Emily Davis:

"George Allen's number one priority is to get our economy growing again through his proven solutions in his Blueprint for America's Comeback. Millions of good-paying jobs could be created through his plan for a more simple, fair and competitive tax code, reasonable regulations and unleashed energy resources of clean coal, natural gas and offshore oil and gas development. With an understanding that tax increases don't create jobs, George Allen supports reducing the tax on job-creating businesses from 35 percent to 20 percent, creating an estimated 5 million jobs over the next 10 years."

Tim Kaine spokeswoman Lily Adams:

"This year, Governor Kaine has hosted nearly 100 round tables with small business owners, community leaders, veterans and seniors to develop a plan to grow the economy and create jobs. Governor Kaine believes we can create jobs and boost growth immediately by investing in infrastructure and leveling the playing field for small businesses so they can hire new workers. But Governor Kaine also knows we have to keep our eye on the future, which is why he's committed to fighting for resources and reforms at all educational levels to ensure our workforce can out compete the rest of the world."

1st District

U.S. Rep. Rob Wittman

"To rebuild our economy, we need to eliminate the uncertainty caused by Washington so Virginians can focus on what really matters. By keeping taxes low for families and small businesses, cutting bureaucratic red tape that stifles innovation, repealing the president's health care overhaul and replacing it with sensible, cost-reducing reforms, we can create a more stable environment for job growth. In addition, expanding American made energy – especially right here in Virginia – will not only create jobs, it will strengthen our national security. Lastly, a healthy Chesapeake Bay is critical to our region's economy, and I am committed to its restoration."

Democrat Adam Cook:

"Anyone who regularly commutes through the tunnels and over the bridges throughout Hampton Roads knows that these vital transportation arteries are nearing capacity and, with continued population growth, will have to be modernized in the near future in any case. Many regions of the country are facing similar needs to modernize, expand or repair vital infrastructure. With more than 13 million Americans unemployed, now would be a good time to move some of these necessary projects up, to create good jobs now and improve the business climate for the long term."

2nd District

U.S. Rep. Scott Rigell's campaign did not submit a response.

Democrat Paul Hirschbiel:

"Growing our economy and creating jobs will be my top priority when I get to Congress. There are still far too many people in Hampton Roads out of work, and countless more that are underemployed. As a lifelong businessman, I know what it takes to create jobs. I've traveled across the country, finding good ideas and building businesses, including right here in Hampton Roads. We need leaders in Congress who will take off their partisan labels and work together on a plan that will create jobs and get our economy moving again."

3rd District

U.S. Rep. Robert C. "Bobby" Scott:

"There are multiple programs with beneficial economic effects that Congress should pursue. Job training and retraining for unemployed workers could fill thousands of job openings in sectors where we have vacancies but not enough qualified applicants. Thousands of infrastructure projects still need completion, and spending on these construction projects is directly injected into local economies and multiplied. Unemployment Insurance is consistently cited by economists left and right as one of the most efficient ways of jump starting the economy, returning over $1.30 for every $1.00 spent. We cannot let partisan divisions keep us from reviving the economy with programs proven to work.""

Republican Dean Longo:

"We need to get the economy working again. Giving the government more money by increasing anyone's taxes isn't the answer. Unemployment in the 3rd District is 65 percent higher than the average for Virginia; African-American unemployment in the district reaches 25 percent. Personal and business tax policies are among the most effective tools to help jump-start the economy and bring jobs. We must give businesses incentives to expand. We must also allow people to keep as much of their money as possible. The expansion of business creates jobs, the increased cash increases personal spending. Together they grow the economy."

4th District

U.S. Rep J. Randy Forbes:

"Americans are tired of 43 months of unemployment above 8 percent. I believe in reducing Washington regulations, lowering taxes and creating incentives for entrepreneurs to start new companies in Virginia. I'm proud to have worked alongside Democrats and Republicans in the 4th District to create state, local, and federal partnerships as well as private sector partnerships to create and maintain jobs. Hampton Roads is full of opportunities to work together — opportunities to get our traffic moving, to fight defense cuts that threaten local jobs and home values, to bring new economic development to our region, and to strengthen our small businesses."

Democratic Chesapeake City Councilwoman Ella P. Ward:

"To date most of the stimulus legislation that passed following the financial crisis of 2008 has focused on saving our banks and the automobile industry. This legislation has had the positive impact intended, but now we must finish our response to the financial crisis by passing job creation legislation, which immediately and directly leads to growth in the economy and creates large numbers of jobs devoted to repairing our roads, bridges, tunnels, and other aspects of our national infrastructure. Working to get this legislation passed will be my top priority."